Jeffrey Tan J:

There are two claims in this action; one by the supplier (plaintiff) of rubber seedlings against his Koperasi purchaser (defendant) for general damages (since capped by the plaintiff to RM175,000), and the other by the defendant against the third parties for a full indemnity against the claim of the plaintiff.

The background facts may be summarised as follows. By a written agreement [P1(3 - 40) - agreement] dated 20 February 1990, the plaintiff agreed to supply and the defendant agreed to purchase 500,000 rubber seedlings, at the price of RM0.85 per seedling. That agreement was unilaterally terminated by the defendant, by its letter dated 12 May 1990 [P1(41)] which stated that the agreement was entered without compliance with the by-laws of the defendant; the letter did not state the particular by-law that was allegedly offended. But in its amended statement of defence, the defendant pleaded that the agreement was executed by the third parties (who were respectively then the chairman and manager of the defendant) without the knowledge (persetujuan) and or authorization (kebenaran) of the board of directors (board), that the third parties had not complied with by-law 45(r) and that the agreement was therefore not valid, and that the plaintiff was a member of the defendant cooperative and was fully cognisant of the by-laws of the defendant. In their joint statement of defence to the third party claim, the third parties pleaded that the 2nd third party was empowered to execute the said agreement on behalf of the defendant and that the 1st third party was only a witness to the execution of the agreement by the 2nd third party.

The agreed issues, which were settled after trial had long begun, still a case of better late than never, were as follows.

(1) Whether the rule in Turquand applies, given the agreed fact that the plaintiff was a member of the defendant society; in the event that the court finds so, then the court shall find that there was a binding agreement, shall find liability against the defendant and award damages; in the event that the court finds not so, then the court shall proceed to issue (2).

(2) Whether the chairman by himself and without the prior sanction or approval of the board of directors could sign the agreement: in the event that the court finds not so under the by-laws, then the court shall further find that the agreement was not binding on the defendant.

(3) Notwithstanding whatever finding on issue (1), the issue as between the defendant and third parties is whether the chairman could execute the agreement without the prior sanction of the board of directors: in the event that the court finds in favour of the plaintiff, and in the further event that the court finds that the chairman could not sign the agreement without the sanction of the board of directors, then the court shall order the third parties to indemnify the defendant for any award that would be made against the defendant in favour of the plaintiff.

The bundles of documents were separately tendered (P1 by the plaintiff, D2 by the defendant, D4 & D5 by the third parties), but by consent were admitted without formal proof subject only to cross-examination. As for the oral evidence, even that subsequently rendered outside the scope of the agreed issues, it was as follows.

The plaintiff (PW1) testified that he was a member of the defendant cooperative. P1(1-2) was the defendant's offer dated 8 February 1990 to him to supply 500,000 seedlings at RM0.85 per seedling. He accepted the offer and signed the agreement [P1(3 - 40)]. The third parties signed on behalf of the defendant. He proceeded to prepare a nursery; he cleared his land of 4 acres of rubber trees. After he received the letter of termination, he contacted the [then] manager of the defendant. "Tidak dapat persetujuan yang dicapai. Saya terpaksa menerima pembatalan tersebut." The rest of the evidence-in-chief of the plaintiff concerned his alleged general damages